Gupta’s lawyer suggests others leaked info on P&G

Now a little more than a week into Rajat Gupta’s insider trading trial, things are really starting to percolate.

Gupta, the former director of Procter & Gamble Co. (P&G) and Goldman Sachs Group Inc. and the centerpiece of the U.S. government’s recent efforts to curb insider trading, is accused of passing tips to former hedge fund manager Raj Rajaratnam.

Arrested last October, Gupta has pleaded not guilty and asserts that the government’s evidence is circumstantial.

The discussions on day six of what is expected to be a three-week trial centered on P&G’s sale of its Folgers coffee unit to J.M. Smucker Co., which was formally announced on June 4, 2008. Gupta’s attorney, Gary Naftalis, suggested in his questioning of P&G Chief Financial Officer Jon Moeller that it was possible news of the Folgers deal leaked out through some of the many lawyers, investment bankers, external-relations advisers and corporate tax specialists who worked on the transaction.

"So there were all of these people working on the transaction in addition to the Smucker's people, true?" Naftalis asked Moeller, who responded: "Yes, that's true."

Prosecutors also alleged yesterday that Gupta called Rajaratnam the day before P&G announced its quarterly earnings in January 2009, telling him that P&G expected organic sales growth of 2 percent to 5 percent for the fiscal year. This was less than what was previously disclosed to the market.